I too faced the same problem. We were using the miracle blanket and Jake got too big for it and eventually spent 4-7 a.m. each morning breaking out of the swaddle. It was drove me crazy so I decided to try and get rid of the swaddle. Unfortunatley, that was easier said then done. I tried one arm out, the aussie swaddle, and going cold turkey. Nothing seemed to work and I would sit by his crib watching the poor little guy almost fall asleep and them rub his face and start crying. The minute I swaddled his arms, he went right back to sleep. I posted on this board and was advised to keep it up for a few more months.
Some babies find their fingers and can self soothe themselves but Jake was very bothered by his arms and hands and always seemed to have uncontrolled movements when trying to fall asleep. So I found a new way to swaddle and he has slept like a champ the last few months. He is almost 7 months old and we are just starting to have some luck with unswaddling him. He isn't quite there yet, but we have made progress.
If you would like to get rid of it, I suggest you try one arm out or the aussie swaddle (directions posted at the top of this forum) for a few days. If it doesn't work, go ahead and continue swaddling. Once I found a swaddle that worked (homemade miracle blanket) and he stayed in it we had no problems. And until now, he had shown no signs of being ready to sleep without it.
Good luck!